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On the 28 September 2018, Tenfu (Cayman) Holdings Company Limited (HKG:6868) will be paying shareholders an upcoming dividend amount of CN¥0.06 per share. However, investors must have bought the company’s stock before 11 September 2018 in order to qualify for the payment. That means you have only 4 days left! Is this future income a persuasive enough catalyst for investors to think about Tenfu (Cayman) Holdings as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

Check out our latest analysis for Tenfu (Cayman) Holdings

How I analyze a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it the top 25% annual dividend yield payer?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share amount increased over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

Does Tenfu (Cayman) Holdings pass our checks?

Tenfu (Cayman) Holdings has a trailing twelve-month payout ratio of 77.0%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view Tenfu (Cayman) Holdings as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Relative to peers, Tenfu (Cayman) Holdings produces a yield of 3.4%, which is high for Food stocks but still below the market’s top dividend payers.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Tenfu (Cayman) Holdings for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three fundamental factors you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for 6868’s future growth? Take a look at our free research report of analyst consensus for 6868’s outlook.

2. Valuation: What is 6868 worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether 6868 is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.